Maryland raises gas tax to pay for transport needs

Tuesday, April 02, 2013

Maryland has become the latest state to pass an aggressive transportation bill to raise money for roads, bridges and transit infrastructure which have been underfunded in relation to maintenance needs and rising traffic volume.
On Friday, the state Senate voted to increase the state's gas tax by up to 20 cents by mid-2016 to raise an estimated $4.4 billion over six years. Motorists are expected to get a 4-cent per gallon tax increase by July.
The gas tax increase comes through several mechanisms different than the traditional method of taxing by the gallon, which currently stands at 23.5 cents: indexing the gas tax to inflation, the addition of a 1 percent sales tax on the wholesale price of fuel this year, which will increase to 2 percent next year and 3 percent in 2016; the rate increases to 4 percent in 2016 and 5 percent in 2017 unless Congress passes an Internet sales tax.
The House of Delegates passed the measure earlier in the week and Gov. Martin O'Malley is expected to sign it.
Passage of the bill comes one month after Virginia enacted an ambitious plan to overhaul its transportation funding program by replacing the gas tax with a sales tax on gasoline and a series of other revenue measures to raise $3.5 billion over five years.
Other states have also recently increased motor fuel taxes even as the federal government refuses to consider any raise to the federal tax on gasoline and diesel fuel at the pump. - Eric Kulisch